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Wednesday, May 16, 2012

WORCESTER — With many business property owners swooning from dramatic increases in their property assessments, some city councilors are signaling that the lowest residential tax rate allowed under tax classification is not in the cards this fiscal year.

They said that may have to be the case because the highest possible tax rate for commercial and industrial properties, combined with the skyrocketing assessments, would place a tremendous tax burden on many businesses.

"It doesn't take a math whiz to figure out that with the lowest residential tax rate, commercial tax bills would go through the roof," said Councilor-at-Large Frederick C. Rushton.

"We have to figure out what we're going to do with this situation," he added. "The way I'm reading the tea leaves, if we vote the lowest residential tax rate it would send a true shock to the business community. We have to be cognizant of the cause and effect of the tax rates we eventually set because the bottom line is what the final bill ends up being."

Since the early 1980s, the city has set separate tax rates for residential and commercial-industrial properties, as is allowed under tax classification.

The City Council has adopted the lowest residential tax rate in several of those years and in all years the residential tax rate has been significantly lower than the commerical-industrial rate.

Adoption of the lowest residential tax rate translates into the highest possible tax rate for commercial and industrial properties.

Pending final certification of the city's triennial property revaluation, the City Council hopes to finally be able to set the tax rates for this fiscal year on May 22.

Councilor-at-Large Konstantina B. Lukes, who has traditionally voted for the lowest residential tax rate, said the tax rates set by the council for this fiscal year will be one of the most difficult decisions it will have to make.

While acknowledging that adoption of the lowest residential tax rate could cripple many businesses, she said she does not want to see homeowners have to bear the burden through higher taxes as a way to correct past assessing practices.

Mrs. Lukes has suggested that homeowners be asked to pay no more of an increase in their property taxes than what they paid the previous year.

"We're all going to get blamed for this," Mrs. Lukes said. "We find ourselves having to correct the culmination of a series (assessing) missteps."

District 5 Councilor William J. Eddy, meanwhile, said the setting of the tax rates should not come down to pitting homeowners versus business owners, as seems to happen every year.

"We're one community," Mr. Eddy said. "We have to make a decision on the tax rate that ensures our residents have a livable city."

District 1 Councilor Tony Economou said he fears a higher tax rate for business properties could "unravel" all the progress that has been made in the city the past several years.

"We have to look at all options going forward," he said. "These kind of tax increases simply cannot be absorbed by many businesses."

But District 2 Councilor Philip P. Palmieri, who has already indicated that he is leaning toward once again supporting the lowest residential tax rate, said it is an issue of fairness.

He said homeowners should not be asked to pick up a greater share of the tax burden to compensate for many business properties being under-assessed for so long.

"This is a problem no one had anticipated; certainly not of this magnitude," Mr. Palmieri said. "I've always committed to the lowest residential tax rate and will probably remain that way. Residents shouldn't have to carry the full burden."

District 3 Councilor George J. Russell, who has questioned the method that was used to assess commercial and industrial properties, said he has always advocated for tax rates that favor the homeowner.

"My fear is that the council is going to shift the tax rate to the homeowner to some how make-up for an assessment process that does not reflect accurate values," Mr. Russell said.

Of the city's 2,278 commercial parcels, the assessed valuations for 317 have gone up 10 percent to 20 percent; 498 went up 20 percent to 40 percent; and 540 went up 40 percent to 100 percent, according to city officials.

Meanwhile, the valuations of 174 commercial properties have increased by more than 100 percent.

Of the 598 industrial properties in the city, the assessed valuations of 58 of those properties have increased by 10 percent to 20 percent; 98 properties went up by 20 percent to 40 percent and 101 properties shot up 40 percent to 100 percent.

In addition the assessed valuations of 60 industrial properties have more than doubled.

Meanwhile, residential property assessments have decreased by 3.8 percent on average compared with the previous year.